Beef Demand: Recent Determinants and Future Drivers
Prepared for the Cattlemen’s Beef Board
Prepared by:
Ted Schroeder
Kansas State University
Glynn Tonsor
Kansas State University
and
James Mintert
Purdue University
April 30, 2013
Acknowledgements: We gratefully acknowledge the Cattlemen’s Beef Board for providing
funding to support this project. Thanks to Courtney Kalous, Cattlemen’s Beef Board, for
coordinating this study and assisting in providing timely data and information as requested. We
thank Shelby Hill who helped with the past literature summarization. We are indebted to a
selected group of research and industry beef demand experts who took the time to complete a
survey that is an important component of this research. This study benefitted tremendously
from the beef demand experts who were willing to share their thoughts on factors driving
future beef demand. All opinions presented in this study are solely those of the authors.
CHAPTER 1: SUMMARY REPORT
Background
Consumer demand for beef is one of the most important and widely discussed, yet poorly
understood, concepts affecting the beef and cattle industry. Difficulty in understanding
demand originates from fundamental misunderstandings of demand, but also arises because of
the complexity of consumer beef demand determinants. Past studies have rigorously
estimated various beef demand models to quantify consumer preferences for beef. More
recently, retail grocery scanner data is being analyzed to learn more about consumers
purchasing decisions and almost weekly new surveys regarding particular consumer sentiments
or shopping habits related to the meat industry surface in the media. So much information and
data is present that assessing the relative importance of all this new information to monitor
and project consumer demand for beef is daunting, to say the least. Yet, because of the
importance of beef demand for industry prosperity, it is imperative that the beef industry
recognize what drives consumer demand, what expectations are for the future, and assess the
industry’s ability to adjust practices to target evolving consumer preferences or to influence
important demand determinants.
The purpose of this study is to summarize current knowledge of consumer demand for beef and
identify the best opportunities for the industry to positively influence beef demand. Moreover,
this study was undertaken to provide the Cattlemen’s Beef Board with information useful in
identifying and prioritizing strategies to enhance future US consumer demand for beef.
This report is comprised of several chapters. This first chapter provides the overall summary
and recommendations for the entire project. The other chapters of the report detail individual
segments of the project to provide depth on specific information that we collected and analysis
we completed. In particular, Chapter 2 summarizes our analysis of previous consumer beef
product attribute preference ranking studies; Chapter 3 provides results of a consumer survey
we completed; Chapter 4 contains details of our expert survey about demand determinants;
and Chapter 5 is provided to clarify demand concepts and highlight resources available to
producers from the study. Chapter 6 provides an update of how external macroeconomic
factors have influenced beef demand in recent years.
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Objectives
The principal objectives of this project are to provide an assessment of major domestic beef
demand determinants and identify key demand drivers on the horizon that will shape future
demand for beef. Emphasis is placed on assessing factors affecting beef demand that the beef
industry can actually influence so that future demand enhancement efforts can be targeted
effectively.
Specific objectives include:
1.
Provide a synthesis of beef demand determinants from published research. A large
body of research has been published recently evaluating an array of factors
impacting beef demand. Many methods have been used to quantify various
demand determinants including traditional econometric modeling, scanner data
analyses, panel diary data investigations, consumer surveys, and consumer
experiments. This review and synthesis provides a comprehensive picture of
domestic beef demand determinants from past research.
2.
Identify evolving factors expected to influence beef demand in the future. Drawing
upon on-going research, the project investigators have been analyzing we address
unanswered economic questions to guide future research. This work includes
projects assessing economic aspects of retail beef pricing, ground beef demand,
food safety, animal welfare, and origin labeling in the beef industry, providing the
project team a unique ability to elaborate on developing demand drivers.
3.
Combine information garnered from past and new research to identify evolving
factors likely to impact demand in the future. An assessment of key future beef
demand drivers is provided to help the beef industry develop plans and prioritize
strategies to boost beef demand.
4.
Provide recommendations to the beef industry on potential demand enhancement
strategies that appear most likely to be successful.
Procedure
To accomplish the objectives of this project we undertook a series of activities to compile,
collect, and add to the body of information regarding beef demand drivers. Our approach to
information collection was as follows:
1. To collect and analyze the published literature on beef demand drivers and consumer
preferences. The idea here was to synthesize what we know from past research to
determine what is known that is most germane for understanding beef demand,
summarize this information, and determine what could be generalized from this
research. This section of the study examined selected studies published since 2000 and
as such, by definition, is somewhat backward looking at what consumers have indicated
are there preferences in published studies completed over the past 14 years. The
details of this effort are presented in Chapter 2 of this report.
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2. To complete a consumer survey ranking preferences for a broad set of demand
determinants. The purpose of this survey was to characterize a current snapshot of
what consumers indicate are important drivers of their beef purchasing decisions. The
survey was completed exploring consumer preferences for ground beef and steak as
separate products to discern similarities and differences. The survey was completed in
April 2013 with 975 respondents (488 for ground beef and 487 for steak). Detailed
results of the surveys are provided in Chapter 3.
3. To complete a survey of experts to determine what academic, industry, and government
researchers and analysts collectively perceive as the forward-looking beef determinants
and of the ability of the industry to influence key drivers in the future. The expert
survey was considered a particularly novel and powerful way to synthesize what the
most informed experts who are studying and analyzing demand drivers, associated
technology, and the industry believe to be the most influential future beef demand
determinants. We consider this segment of the study to be a forward looking
cornerstone by which we compare and contrast with the previous research and the
consumer survey results. Overall, we had complete responses from 159 experts
providing a rich set of information from a very knowledgeable group. Detailed results of
this survey are presented in Chapter 4.
4. To provide a set of recommendations from this combined body of work we conducted
to help guide the beef industry in demand enhancement efforts.
5. To provide a set of topics we believe would be valuable for future research and analysis
to help design and assess strategies adopted to enhance beef demand.
6. To make a set of materials available to producers summarizing the purpose, findings,
and implications of this project. These materials will be available and placed together as
a package on a single web site accessible to producers similar to related beef demand
resources noted in Chapter 5.
After careful review of past research, and to facilitate summarization of the large number of
potential demand drivers present, we elected to broadly categorize beef demand determinants
(or quantity demanded in the case of Price) into 7 broad categories:
1.
2.
3.
4.
5.
6.
7.
Price
Product Quality and Form
Nutrition
Health
Food Safety
Social Aspects
Sustainability Aspects
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These 7 broad factors enable us to categorize every beef demand determinant that we have
encountered in the literature and the media. Of course, any specific demand driver may
arguably fit under more than one broad category. For illustration and to show more specifically
what specific types of beef demand factors we categorize under each of these 7 broad factors,
Table 1 provides a listing of factors that we placed into each broad category.
Table 1. Examples of Specific Beef Quantity Demand Drivers Associated
with Each of the Seven Broad Categories.
Price
Price per pound
Health
Amount of Fat
Food Safety
Type of Fat
E. coli
Cholesterol
Salmonella
Arteriosclerosis
Listeria
Carcinogenic
Campylobacter
Sodium
BSE
Calorie
Product Quality and Form
Taste
Juiciness
Consistency
Package/Portion Size
Color/Appearance
Freshness/Shelf Life
Prep Ease/Convenience
Tenderness
Social Aspects
Animal Welfare
Small Farm
Local
Country of Origin
Cloning
Natural or Organic
Antibiotics
Growth Promotants
Nutrition
Protein
Iron
Zinc
Carbohydrate
Other Nutrients
Sustainability Aspects
Environment
Community
Labor
Efficiency
Profitability
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Synthesized Results
Here we provide a summary of key points we have gleaned from the analysis of past literature,
the consumer survey, and the expert survey. We focus on both similarities and divergence of
findings across these sources of information to provide the clearest picture of demand drivers
and identify opportunities for industry to most influence beef demand going forward.
Before we present our findings, we cannot emphasize enough some important issues that must
be kept in mind as we interpret results and draw associated inferences. First, consumers are
diverse. The United States has a disparate population varying widely by factors that clearly
associate with divergent beef preferences and demand including gender, age, ethnicity,
economic status, lifestyle, and other socio-economic attributes. Because of this immense
diversity, consumer preferences for beef are heterogeneous, not all that dissimilar from our
varied preferences for other things such as different styles of music or alternative leisure
activities. One size does not fit all and perfectly rational and informed people rank beef
product preferences differently. This heterogeneity is also noted in the “tale of two
consumers” outlined in the 2013 Power of Meat report and the identification of different
population segments (e.g. “Socially Conscious Moderate Beef Eaters” and “Active Skeptics”) in
the ongoing Consumer Image Index. This must be kept in mind, because it creates challenges in
generalizing at least some conclusions, though not necessarily all of them (more on this later).
Second, when reviewing previous research, as well as our own surveys conducted for this study,
it’s important to recognize that study design and study results are not entirely independent.
Even the choice of topics studied, by their nature, influence people’s perceptions and impact
how they respond to surveys. Furthermore, all studies have weaknesses and omissions that
require careful scrutiny because they impact the findings. As seen in the various results
presented here, there is not a consensus across studies, let alone across individual participants
within a study, on important results. Sorting out what can be generalized and what the
diversity of perceptions implies, however, is valuable because conclusions do not necessarily fit
all consumers. Given that caveat, it is important to recognize that, where there is consistency
across the information sources we evaluate (prior published studies, our consumer survey, and
the expert survey) the findings are very robust.
Table 2 provides a ranked summary of beef demand driver importance from aggregated
product attributes across previous preference studies, our consumer surveys, and our expert
surveys. Several important factors arise as consistently among the most important drivers of
per capita consumption of beef and beef demand. First, Price is well known as an important
determinant of per capita consumption (or in economists’ terms, quantity demanded). All of
the information sources indicate price is among the most important consumption
determinants. The lowest rank Price received was in our consumer survey, where it ranked
third. The rest of the broad determinants, aside from Price, presented in Table 2 are demand
shifters. That is, they directly impact the level of demand (as opposed to Price, which simply
provides movement along a demand curve). Food Safety and Product Quality are consistently
the top two demand shifters for both ground beef and steak with Health ranking third among
demand shifters for both products.
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Equally important in Table 2 is the observation that Social Aspects and Sustainability are
consistently among the lowest ranked demand shifters, across all information sources. These
factors are receiving considerable attention in the news, they have captured a large proportion
of recent research interest, they are high in the list of public policy debates, and they have
become a focus of attention within the beef industry. Yet, despite all this attention, these
factors are not currently important aggregate demand shifters. Although our research does not
indicate these issues are unimportant, in part because ignoring them could result in substantial
cost burdens being placed upon the industry, the take home message is investing the industry’s
limited resources into shifting consumer demand by boosting beef’s Social or Sustainability
product attributes is not likely to noticeably enhance aggregate beef demand. But as we
discuss below, this does not imply that these issues should be dismissed entirely or ignored.
Table 2. Summary Comparison of Product Attribute Rankings Across Information Sources, Ground
Beef and Steak
Beef
Ground Beef
Steak
Preference
Consumer
Expert
Consumer
Expert
Rank Studies
Survey
Survey
Survey
Survey
1
Food Safety
Food Safety
Price
Food Safety
Price
2
Price
Product Quality Food Safety
Product Quality Product Quality
3
Health
Price
Product Quality
Price
Food Safety
4
Product Quality
Health
Health
Health
Health
5
Sustainability
Nutrition
Nutrition
Nutrition
Nutrition
6
Social Aspects
Social Aspects
Sustainability
Social Aspects
Social Aspects
7
Nutrition
Sustainability
Social Aspects
Sustainability
Sustainability
The rankings of the broad categories provide essential information for understanding the major
demand drivers. However, it is important to recognize the diversity among consumers. This
means that although the aggregate ranking across all consumers of some attributes is low,
there are some consumers that rank these attributes quite high in their preference ordering.
For example, some consumers and some experts rank Health highest in beef demand
preference importance rankings even though it is, on average, ranked approximately fourth
among the 7 broad categories of demand determinants. This indicates that across individual
consumers (and possibly groups of consumers) and experts, the rankings in Table 2 can and do
differ. As a result, developing messages or product offerings focused on specific attributes to
targeted groups of consumers could be beneficial. Moreover, while we placed individual issues
into a sole category, alternative categorization could certainly have been applied. This ability
for an attribute or issue to fall into multiple categories is common as reflected in the “article
hits” allocation process used in the Beef Issues Quarterly (BIQ) ongoing media analysis. For
instance, articles on finely textured beef are categorized in BIQ as food safety articles but could
have been placed in the marketing, economics, or production categories. We will focus on this
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more as we summarize individual product attribute rankings that comprise the broad
categories later in this summary report.
As important as it is for the beef industry to understand the ranking of various broad product
attributes in beef demand, appreciation is also needed regarding which attributes can be
influenced most effectively by the industry to enhance demand. To see this more clearly,
consider one broad category of demand shifters, Food Safety. Food Safety is clearly an
important beef demand shifter. However, if the industry has limited ability to either improve
beef safety, or to improve consumer perceptions of beef safety, investing the industry’s limited
resources in this area would have little impact on consumer demand for beef. Alternatively, if
the industry can improve beef safety via investment in new technology or food safety
enhancing interventions in beef production, processing, handling, or preparation, or if the
industry can improve consumer perceptions of beef safety (or both), then making a strategic
investment in the Food Safety area could have a significant positive impact on beef demand. To
further assess the feasibility of positively influencing beef demand via the broad categories of
demand shifters, we surveyed experts to garner their opinions regarding the industry’s ability
to influence these factors. To our knowledge, this is the first study that has gathered this
important information from a group of beef demand experts.
Table 3 summarizes the expert survey respondent perceptions regarding the industry’s ability
to influence the broad set of beef demand factors to impact demand. For both ground beef
and steak, by a wide margin, Product Quality and Food Safety are ranked as the factors the
industry can most feasibly improve upon to increase beef demand in the next 10 years. For
Product Quality, 89% of steak and 64% of ground beef expert survey respondents indicated the
industry has either a strong or very strong ability to increase beef demand by improving quality.
Similarly, for Food Safety, 63% of steak and 59% of ground beef expert survey respondents
believe the industry has either a strong or very strong ability to increase beef demand via
improvements in the food safety arena.
For the remaining broad demand factors, there was much less consensus among experts
regarding the industry’s ability to address the potential demand shifters in ways that noticeably
improve demand for beef. For example, on average, experts responses tended to range
between marginal inability and marginal ability of the industry to improve beef demand via the
Health, Price, Sustainability, Social, Health, and Nutrition categories although, as discussed
below, this varies somewhat for individual attributes within these broad categories.
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Table 3. Expert Survey Ranking of Industry Ability to
Influence Impact of Broad Factors on Per Capita Beef
Consumption
Beef Product
Rank
Ground Beef
Steak
Product Quality
Product Quality
1
Food Safety
Food Safety
2
Health
Sustainability
3
Price
Social Aspects
4
Sustainability
Price
5
Social Aspects
Health
6
Nutrition
Nutrition
7
Combining the industry’s ability to influence beef demand drivers with the importance of these
determinants provides guidance regarding the industry’s best opportunities to increase beef
demand in the future. Figures 1 and 2 do just that. Beef demand shifters plotted in the upper
right quadrant of each figure, based on expert responses, have a large potential impact on
demand and are factors that the beef industry has the most potential to address and influence.
Conversely, beef demand factors plotted in the lower left quadrant of each figure have
relatively low impact on demand and are factors that the industry is not as well positioned to
address. Demand factors in the upper left quadrant are those the industry could influence, but
have relatively low impact on beef demand and, conversely, demand factors in the lower right
quadrant are factors that have a potentially large impact on demand, but the industry has
relatively little ability to influence.
It is readily apparent that, taking importance and feasibility together, Product Quality and Food
Safety stand alone with respect to the combination of importance and feasibility to influence
demand for both steak and ground beef. Health and Nutrition, both important beef demand
drivers, and Price, according to our experts, are much more difficult for the industry to
appreciably influence, at least as broad categories – though individual attributes (discussed
below) may offer more opportunity.
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Figure 1. Location of Broad Demand Factors within Impact and Feasibility Space, Beef Steak
Version (Medians and Quartile Ranges; Impact N=89, Feasibility N=81).
Figure 2. Location of Broad Demand Factors within Impact and Feasibility Space, Ground Beef
Version (Medians and Quartile Ranges; Impact N=88, Feasibility N=81).
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Important to recognize is that there are some individual product attributes within the 7 broad
categories that received different rankings than the overall summary category itself. However,
sorting this out is a daunting task since so many possible individual product attributes exist. To
provide insight into individual attributes that are important, yet might be masked by the
summary results in Table 2, we focus on key individual product attributes in the next section.
Freshness and Food Safety
The two highest ranked specific product attributes in the research literature (among 45 specific
attributes identified) and in our consumer survey (among 11 specific attributes) for both ground
beef and steak, by a notable margin, are product freshness and food safety. We categorized
freshness as a Product Quality attribute, but it could be argued that it’s related to Food Safety.
The expert survey revealed considerable (more than 70%) agreement that, over the next 10
years, beef product freshness could positively impact beef demand. However, approximately
80% of experts also revealed concerns about food safety adversely impacting beef demand.
Specifically E. coli (79% for ground beef, 68% for steak), Salmonella (72% for ground beef, 56%
for steak), and Listeria (62% for ground beef, 47% for steak) were all identified as concerns.
Safety and freshness are clearly major future drivers of beef demand. Moreover, experts see
the industry as having substantial ability to influence these specific attributes. They are, in fact,
among the areas where the experts are most confident the industry can have a positive impact
on demand in the next 10 years. In the 2013 Power of Meat Study, only 25% of consumers felt
that they were very knowledgeable about how to assess meat freshness, yet our research
indicates it is very important to them. This reveals an education opportunity that could help
consumers become more confident regarding freshness of beef products they are offered in the
retail meat case.
Price
Beef price deserves particular discussion in assessing beef demand determinants. Price itself is
not a demand determinant since price is actually part of the definition of demand. That is,
demand is a schedule of the various quantities of beef a consumer will consume at each price
level. As such, beef price is directly tied to per capita consumption. All else constant, lower
prices entice more consumption and higher prices discourage consumption. When a consumer
makes purchasing decisions, price is near the top of the specific attributes they consider as it
ranks 4th among the 45 attributes we identified in previous research in relative importance for
beef purchasing decisions and has been ranked highest among a selected group of purchase
determinants in all of the last six Power of Meat Studies (2008-2013). Furthermore, as a
determinant of per capita beef consumption, experts rank price collectively and unambiguously
as the most important attribute affecting per capita consumption. In demand language, this
simply means that beef’s own-price elasticity (the percentage change in quantity consumed per
person) is larger in absolute value than the elasticities of each of the other 6 broad factors
listed in Table 2.
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What are the implications of the large body of research confirming that beef price is very
important to consumers? First, it illustrates that consumers are looking for good value when
making purchasing decisions. From a consumer perspective, beef is valued relative to
competing proteins sources including chicken, pork, and fish. Keeping beef prices as
competitive as possible with principal meat and fish competitors will continue to be important
to making beef an attractive choice for consumers. Doing so requires continuous adoption of
efficiency enhancing technology in beef production, processing, and marketing. However,
results from our survey of beef experts indicate that they see little opportunity over the next 10
years for the industry to significantly influence beef prices we suspect especially relative to
competing protein prices. Consequently, our recommendation is that the industry embrace
efficiency-enhancing technology development and adoption that does not negatively impact,
and ideally enhances, product quality and safety attributes that are important beef demand
determinants.
Beef Taste, Color, Consistency, Juiciness, Preparation ease, and Package/Portion Size
These Quality factors are at least somewhat important and arguably next in line in importance
in terms of specific attributes, though that is somewhat debatable because this is where the
degree of heterogeneity present within and across information source increases significantly.
Past literature and our consumer survey highlight most of these types of specific attributes as
important to consumers. Industry experts also find these attributes in particular as strong
candidates for the industry to influence to have positive impacts on beef demand.
Interestingly, beef experts rate preparation ease as one of the potentially more impactful
future demand drivers with 92% indicating this attribute is likely to have a slightly or very
positive impact on ground beef demand in the next ten years and 82% having the same
sentiment for steak. In contrast, our consumer survey and past research studies ranking
consumer stated preferences find preparation ease/convenient to prepare to be of much lower
relative importance. However, the recent Consumer Beef Index (2012) shows “taste of beef”
and “quick and easy” as the two most commonly selected reasons for eating more beef. So
quality and ease of preparation appear to be important at least to a segment of beef
consumers. Package size also shares similar divergence in importance across information
sources. Why this divergence is present, we do not know for certain, but it may be related to
industry experts being sensitized to changing consumer lifestyles over time (i.e., forward
looking and evolving) whereas consumers complete surveys at a point in time where
preparation ease is given and consumers are not thinking about potential impacts of new
product innovations in the future.
Experts perceive considerable opportunity for industry to influence how these factors impact
demand. In general, 70% or more (and noteworthy 90% for packaging issues) of the experts see
opportunities for the industry to incrementally increase beef demand via improvements in
these Quality attributes. Even though consumers did not rate these quality factors highly in a
short-run setting, the long-run potential for the industry to boost beef demand via
improvements in quality is one that should be emphasized.
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Health, Fat, Cholesterol
Specific beef attributes associated with factors related to human health such as amount and
type of fat (leanness), cholesterol concerns, carcinogenic concerns, and others as a group are
also important to consumers and very close in ranking with the quality attributes just discussed.
Leanness/fat is the 6th ranked among the 45 specific attributes in previous consumer
preference studies. Similarly, experts perceive this to be of mid-range importance in the future.
Our consumer survey found Health ranked similar to or just below Taste, both of which ranked
lower in importance than Freshness and Food Safety.
Experts are concerned that amount of fat, type of fat, cholesterol, and heart disease impacts
will all adversely impact ground beef demand and steak demand. More than 40% of expert
respondents, and upwards of 70% with ground beef cholesterol, indicate these factors will have
a slight or very negative impact on consumer demand. The good news is that experts view
these as significant future opportunities for the industry to change the impacts of in a positive
manner with 40% (heart disease) to more than 70% (amount of fat) of experts having this
sentiment. This appears to be a fruitful area for industry change and associated consumer
demand enhancement although it is ranked in about the middle in terms of priority.
Nutrition
Our consumer survey revealed nutritional concerns as next in importance, below health issues,
and our experts provided a similar ranking for this attribute. Previous studies have this attribute
rated lowest among the 7 broad demand factors and 32nd among the 45 specific attributes.
Thus, in terms of relative importance, it appears at best in the middle of identified demand
drivers.
However, components of Nutrition are identified by experts as having good potential for future
positive demand impact. Protein and iron content were especially identified by experts (80%
agree on protein and 70% on iron having slight or very positive impacts) as potential demand
enhancement opportunities. Furthermore, a good share of experts finds these as feasible to
have at least a small positive impact (50% for steak and 60% for ground beef) in the future. In
the 2013 Power of Meat study, only 21% of consumers felt they were very knowledgeable
about nutrition of meat so there appears to be an educational opportunity for beef’s nutritional
advantages.
Comparing our results to findings from the Consumer Beef Index reveals some consistencies.
Consumers eating less beef cited “health reasons,” “limiting cholesterol or fat,” and “other
meats seem healthier” as the three most common reasons. And approximately one-half of
consumers eating more beef cited “adding protein to your diet” and “lean beef fits a healthy
diet” as key reasons. Nutritional aspects of beef are likely worth continuing to develop and
promote, especially to targeted populations. However, it appears to be a middle, rather than a
high priority.
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Social and Sustainability Aspects
Overall, social and sustainability aspects of beef demand are the lowest ranked drivers typically
among all the factors we examined across all information sources (with the exception of
Nutrition, which ranks lowest in the past research studies possibly in part because it has not
been studied as deeply as other factors). Furthermore, experts do not rate social or
sustainability attributes as highly impactful or as having substantial opportunity to influence the
demand impacts they may have. However, there is additional information here that should be
noted.
Past research suggests things such as origin labels (especially product of US or North American
Origin), locally produced, naturally produced, produced without use of GMO’s, growth
hormones, or antibiotics appear to be factors some consumers prefer. If faced with a variety of
these alternative labels, it is certainly not clear in the wealth of information we have, how these
might rank relative to each other. What also complicates many of these attributes is that
consumers often perceive these attributes to be different from what they actually are or to be
signals for something else. For example, consumers have been shown to relate origin labels
with food safety and antibiotic use; GMO use, and/or growth hormone use with food safety,
nutrition, and/or product quality; and locally produced with food safety, product quality, and
sustainability. All of these attributes also tend to have highly variable consumer preference
rankings relative to each other and relative to previously discussed attributes having higher
general importance rankings.
So, what should the industry do about responding to consumer preferences related to these
attributes? Our perspective is that these attributes are likely to evolve into niche market
opportunities that will probably see slow aggregate growth in the future. Some of these may
be important enough to address from a broad industry perspective at some point in the future,
but for now, there are much more broadly important factors, as previously discussed, that offer
greater opportunity for overall industry demand growth. That said, some of these factors can
have short run marked impacts on the beef industry. Recent examples such as the lean-fat trim
beef issue, animal welfare breaches that occur (e.g., Westland/Hallmark), the percolating issues
related to use of beta agonists that are in the media, or the locally raised sustainability
conversation illustrate potential impacts of these factors. This is generally documented in the
“unfavorable” rating of social issues (using our project’s nomenclature and the BIQ favorability
scoring approach) in the Beef Issues Quarterly ongoing media analysis.
We advise the industry to not ignore these issues even though they do not appear to be major
overall demand drivers. The beef industry needs to be vigilant about these issues and be well
prepared to address them as they arise - and be aware that they will continue to arise. We
advise that the industry invest in being prepared and aggressively address these issues as they
occur. Stated differently, responding to these issues may be “a cost of doing business”, but
likely not an area offering most opportunity for demand enhancement.
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Recommendations
1. First and foremost, invest in food safety enhancement and assurances. This is an
essential product attribute, consumers demand it, and there is considerable opportunity
to positively improve beef demand in the future. Avoiding beef food safety breaches
should be a high priority. Moreover, developing systems that assure consumers beef is
fresh and safe and that increases their trust in beef has considerable opportunity for
enhancing demand. Although this project is domestic demand focused the issue of food
safety is also particularly important to maintaining and building export demand.
2. Product quality is a substantial demand driver. The industry needs high quality products
that offer consistently excellent flavor, color, tenderness, juiciness, etc. and that is
offered to consumers in product forms they prefer. Development of new products is
certainly an important dimension of this opportunity, but consistency and integrity of
product labels is another important component. Recently approved URMIS (Uniform
Retail Meat Identity Standards) nomenclature update is a simple example that may
improve clarity of retail labels and hence help consumers make purchasing decisions
that better match their preferences. Products that fail to meet or exceed quality
expectations of consumers every time have a significant negative impact on beef
demand. Ongoing development of the USDA certified tenderness program reflects
related quality concerns and opportunities. Although this is not a new challenge, the
need to improve product quality and develop new products that consumers find
enticing should be one of the beef industry’s highest priorities.
3. Consumers are sensitive to beef prices. This means continued investment in
production, processing, and merchandising efficiency is important from an industry
competiveness perspective. This investment will likely include substantial private and
collective industry-wide approaches. Private investment will be the main driver of new
technology development while collective investment may focus more on assessing how
these developments will be received by consumers. As production advancements are
made and adopted, it is critical to keep in mind how they affect perceived and actual
food safety, nutrition, product quality, and other important consumer demand
attributes. Production advancements that enhance food safety, product quality,
nutritional content, and healthfulness of beef should be of highest priority.
There is likely a tradeoff in many cases between production efficiency advancements
and important consumer preference attributes in part because many efficiency
enhancements target pounds of meat produced per unit of input. As new technologies
are developed and adopted it is essential that the industry assess any tradeoffs of such
advancements on consumer perceptions of how they impact product quality, safety,
and nutrition attributes and deal with them accordingly.
4. Health and nutritional aspects of beef are important to consumers and these need
continued industry attention. Type and amount of fat, cholesterol issues, and heart
disease concerns must continue to be addressed. On the positive side, there appears to
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be considerable opportunity to influence these in a positive way by industry. On the
other end of the spectrum, beef’s advantages with respect to protein content in
particular and perhaps iron and zinc appear to be opportunities for the industry to
continue to develop and promote with consumers. The 2013 Power of Meat study
highlighted the elevated interest of shoppers under 25 years old in high protein
offerings but there is an overall lack of knowledge about beef nutrition. This suggests an
opportunity to target younger shoppers with specific positive health and nutritional
messages as a way to build or maintain beef demand among a population segment
which has been exposed to a great deal of negative information about beef. This
segment has also been especially harmed by the recent US recession during their food
habit forming years which is important as this can shape their consumption patterns for
upcoming years when they will increasingly comprise the higher-earning portion of the
population.
5. Social and sustainability issues including consumer skepticism about production
technology, perceptions that technologies degrade product quality, safety, nutrition,
concerns about animal handling etc. should not be ignored. Although important,
investments to address social and sustainability issues will likely have a lower demand
enhancement payoff than investments in other key areas. These issues can be
addressed partly through continued consumer education. However, the industry must
also do this education with full integrity and open disclosure. Connecting producers with
consumers is a worthwhile and valuable initiative that should be promoted and
supported by the beef industry. The best education for consumers is experiencing
producers and farms and ranches in whatever ways are feasible. Equally important to
dealing with consumers on these issues is educating producers, industry technology
developers, processors, and retailers in these same issues. Advancing consumer trust
requires participation by all industry participants, not only in their efforts to educate,
but equally important in their own management decisions. If social pressures such as
concerns about GMOs are ignored by the industry because they are not perceived to be
important broad beef demand determinants, public policies surrounding these issues
can quickly become burdensome.
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Future Work Opportunities
Here we provide a set of topics we believe would be valuable for future research and analysis to
help design and assess strategies adopted to enhance US beef demand.
1. There is substantial opportunity to further leverage the industry’s ongoing purchase of
retail scanner data to improve understanding of US beef demand.
a. Potential exists to derive alternative demand indices, obtain a more accurate
picture of retail prices paid by consumers, identify regional demand differences,
and conduct less aggregated (e.g., category or sub-category rather than classlevel) assessments.
b. As the title of a recent Ian Ayres book suggests, “thinking by numbers is the new
way to be smart.” Narrowly, data itself has limited value but when used as an
input in regular assessments to highlight economic implications then improved
understanding follows. Similarly, there is immense opportunity presented by
increasing use of regularly purchased scanner data.
2. An improved understanding is needed of the implications following well known, and
growing, heterogeneity in US consumer beef consumption patterns and desires.
a. Roughly 10% of the population is “trading up” with their meat purchases
increasingly including higher-end cuts and leaner products. Conversely a
significant portion of the public has been “trading down” by increasingly
purchasing ground beef and less lean (and cheaper) products. This latter group
is also eating meat less often and likely where the main reductions in per capita
consumption (reflecting reduced availability) are occurring. This heterogeneity
is noted in the “tale of two consumers” outlined in the 2013 Power of Meat
report. The net implications for aggregate beef demand in coming years are
important to better understand.
3. Ongoing generational and cultural shifts domestically have been recognized in several
regular industry efforts, but a targeted study assessing implications for beef demand
enhancement strategy would be valuable.
a. The economic impact of the “Baby Boomers” (born between 1946 and 1964) has
been well documented and at over 75 million this group remains a critical
current market for US beef. Less understood are the desires, and beef demand
implications, of the “Millennial” generation (born between 1980 and 2000)
which outnumbers the baby boom generation. The Consumer Beef Index is
useful in documenting some unique differences of this generation. However, as
the domestic market of the future, and the consumer segment most hindered by
the recent US recession, this generation warrants further direct assessment.
b. The Hispanic and Asian populations within the United States are expected to
grow notably in coming years. The corresponding palate diversity is generally
recognized, but not narrowly identified. The majority of US households are now
composed of one or two persons changing the role of “family value packages.”
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The combined impacts of household size and cultural changes are worthy of
targeted assessment.
4. An improved documentation, and illustration of implications, would be valuable of
rapidly changing technological abilities and resulting information flows received by
consumers regarding food.
a. Recent research suggests over 40% of the population would use a retailerspecific app to make a grocery list, look up recipes, or look up store sales (Pork
Checkoff, 2012). This suggests the population increasingly looks to technology to
increase convenience in their food purchasing. More broadly, the time to an
audience of 50 million has decreased rapidly with introduction of new
information dispersing technologies. Specifically, Nielsen estimates it took 38,
13, 4, 3, 1, 0.75 years respectively for the radio, television, Internet, ipod,
Facebook, and Twitter to reach 50 million. This depicts the rapid increase in the
volume of information the public receives on a host of things including food
products. A deeper understanding of information flow changes and trends, and
identification of opportunities such as retailer apps, is critical making a targeted
study worthy of consideration. As an example, the Beef Issues Quarterly ongoing
media analysis effort captures some trends in media attention (and how
traditional and social media vary), but has yet to our knowledge identified
economic implications necessary for strategy refinement regarding
communication approaches aimed at enhancing beef demand.
5. An improved understanding of future international beef demand and implications for
the United States is needed.
a. While our study purposely focused on domestic beef demand targeted
assessment of international beef demand strength and future prospects is also
important. Most economists expect overall protein growth to be larger outside
the United States than in the United States in coming years reflecting
adjustments in relative incomes and the pattern of protein demand increasing
with income. While this presents an important opportunity, multiple knowledge
gaps persist. For instance, recent projections suggest that over 40% of the global
increase in meat imports over the next 10 years will occur in Africa and Middle
East yet these are two of the least researched areas in the realm of beef (or
meat for that matter) demand (USDA, 2013). Similarly, while Japan continues to
be a crucial US beef destination, economic growth and demographic patterns
suggest Japan’s relative role as a US beef importer will diminish in the future
further highlighting the need to understand prospects and requirements of
exporting elsewhere. To provide another example, note the comprehensive
forward-looking assessment conducted by the New Zealand sheep and beef
industries (MAF, 2009). While there are obviously several differences in
industries, a parallel study by the United States beef industry could be
immensely valuable.
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References
Ayres, I. 2008. “Super Crunchers: Why Thinking-By-Numbers is the New Way to Be Smart.”
MAF. 2009. “Meat: The Future, Opportunities and Challenges for the New Zealand Sheep Meat
and Beef Sector Over the Next 10 to 15 Years.” Available at:
http://www.mia.co.nz/docs/Meat%20the%20future.pdf
National Pork Board. 2012. “Retail Website & Apps New Research Finding.” April 25, 2012.
Available at:
https://webadmin.pork.org/filelibrary/Retail/Retail%20Website%20and%20Apps%20Research
%20RAC%20Spring%202012.pdf
Pork Checkoff. 2012. “The Pork Consumer’s Path to Purchase.” September 2012. Available at:
http://www.porkretail.org/filelibrary/Retail/NPB_Fall%202012_RAC%20P2P%20Presentation%
20FINAL.pdf
Power of Meat. 2013. “The Power of Meat 2013, An In-Depth Look at Meat Through the
Shopper’ Eyes.” Available at:
http://www.fmi.org/forms/store/ProductFormPublic/search?action=1&Product_productNumb
er=3100
USDA. 2013. USDA Agricultural Projections to 2022. Available at:
http://www.ers.usda.gov/publications/oce-usda-agricultural-projections/oce131.aspx
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